Productivity stagnation is breaking the business-government pact

Something is breaking when it comes to corporate Australia’s relationship with Canberra.

It’s no surprise, of course, that the sense of hope that followed Treasurer Jim Chalmers’ economic reform roundtable in August last year has faded, given the Albanese government’s appetite for big-picture reform is limited.

But the frustration that built up as the country’s decade-long productivity drought gnaws away at living standards seems to be fading, too. It’s being replaced by an air of disillusionment. As the nation passes through what National Australia Bank chief executive Andrew Irvine has called “peak Australia”, corporate leaders are losing faith that change is possible.

Labor has shown little stomach for real economic reform during its four years in government. The Liberal and National parties are too busy fighting for relevance to present a vision for growth. And the corporate sector has been left wary by the startling rise of One Nation, with its grab bag of populist policies drawn from the hard right and the hard left.

The federal budget has pushed business and the government further apart than ever. At the Business Council of Australia’s annual dinner in Sydney in late August, Prime Minister Anthony Albanese trumpeted “the most ambitious tax reform package, the broadest productivity push, and the most net savings in a generation”. But business sees nothing of the sort. Commonwealth Bank chief executive Matt Comyn, who returns to the top of the corporate power list for the seventh consecutive year, may have thrown his considerable weight behind the government’s plan to squeeze property investors out of the market via those tax reforms. But he’s been equally vocal about the lack of reforms to encourage business investment.

While the tech sector successfully fought a rearguard action against the budget tax changes to win start-ups a partial carve-out – a campaign that earned billionaire Atlassian co-founder and Tech Council of Australia chair Scott Farquhar his spot on the corporate power list this year – the whole episode exposed a brutal reality. The business community might have access, but it lacks real influence.

There are some members of the corporate power list trying to change that. Comyn remains the country’s most visible business leader, making the case on everything from productivity to artificial intelligence.

Notably, he hasn’t been afraid to show his own frustration with corporate Australia’s lack of influence, chastising his peers for failing to put the national interest above their own. “Businesses should be prepared to advocate for policies that may, in the near term, not have a positive impact on their P&L [profit and loss statement],” he said at CBA’s full-year results in early August.

Gina Rinehart, who’s on this list for the third year in a row, has taken her influence to a new level, thanks to her heavy financial support for One Nation and the National Party. Rinehart’s investments across iron ore, rare earths and energy only add to her clout. Ryan Stokes, the chief executive of the Stokes’ family’s industrial conglomerate, has also emerged as a vocal advocate for the need for reform across issues such as tax, energy and investment.

But the corporate sector’s influence has been blunted by a series of departures from the top table. BHP chief executive Mike Henry leaves the list once and for all after announcing his retirement in March, but the nation’s biggest company is still represented, this year by chairman Ross McEwan. The former NAB boss has long been outspoken on issues such as tax reform and productivity, and can be expected to continue to air BHP’s concerns about industrial relations.

Shaun Manuell, chief investment officer of the $430 billion industry super funds giant AustralianSuper, joins the list for the first time, replacing his predecessor, Mark Delaney. Manuell is already one of the most influential figures in Australia’s capital markets, but his new role gives him global clout.

Macquarie chief executive Shemara Wikramanayake also departs after announcing her retirement from the financial services giant in late July. Her replacement, Greg Ward, has built Macquarie’s domestic banking operation into a genuine challenger to the big four, and the market will be waiting to see how he puts his stamp on the broader group. Former Woodside chief executive Meg O’Neill leaves the list after becoming the first woman appointed CEO of global energy giant BP earlier this year.

Perhaps the biggest shift on the list is the arrival of two leaders in the vanguard of Australia’s next great investment boom: artificial intelligence. Robin Khuda, founder of the data centre operator AirTrunk, has emerged not only as one of Australia’s wealthiest AI entrepreneurs – he is valued at $2.43 billion on the Financial Review Rich List – but one of the most influential. He’s joined on the list by Telstra chief executive Vicki Brady, one of the country’s biggest investors in digital infrastructure and an early mover in AI adoption.

AI looms as the next big test of the relationship between the government and business. Given the sheer scale of the boom – a committed pipeline of projects worth $150 billion, and another $630 billion in development under way, according to investment bank Barrenjoey – most in the business sector see this as investment the Australian economy desperately needs, and a potential solution to the nation’s persistent productivity problem. But the Albanese government has shown it is increasingly sensitive to community concerns about AI, including energy and water usage by data centres, copyright issues and threats to employment.

Finding consensus on AI would be a challenge at the best of times. But corporate leaders will need to make their voices heard against a backdrop of rising inflationary pressures, an inevitable slowdown in economic growth and growing political division. Don’t hold your breath.